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Art value generation

Eleonora Mantovani - 8th January 2020 - 0 comments

Art value generation is not an exact science, there isn’t a formula that ensures that the piece will increase in value, but there are some things that support the chances of that happening.

Once the artwork is sold to its co-owners, that’s when the complex bit starts. At this point, the seller, together with Feral Horses, manage the asset and work towards the goal of increasing the visibility of the artist, raise the profile of the piece and therefore contribute to the value increase of the works.

The same old story: supply & demand.

As with any other type of asset, artwork value is ultimately driven by supply and demand. In a nutshell: high market demand for a good, combined with a low supply of it will result in fiercer competition from the buyers to acquire the asset, therefore driving its value/price up.

In the case of art, if thousands of people want an artwork (provided they have the purchasing power to do so), and the artist has only created a very limited amount of similar artworks, the price will increase, as each buyer will try to outbid the others in order to own it.

What drives artwork appreciation?

The concept of supply & demand is straightforward enough, but what makes the demand for an artist/artwork increase? Especially when it comes to contemporary art, there isn’t an unequivocal answer, as art value generation is all about teamwork between institutional market experts, commercial players, and the general public.

Generally speaking, the idea is that the more visibility an artist gets, the higher the chances that more people will know them and like their works. Also, a better artistic reputation in the art world means higher value, this can be achieved by being in important museums, galleries, as well as being showcased in reputable exhibitions. Art Prizes are also a factor that affects the value of an artist as they are, in fact, a recognition given by industry professionals that certify the quality and artistic message of an artist. Cultural mediators such as curators and art critics also have a major role to play. In fact, they document a specific artwork or body of work in order to convey the artist’s message and explain its relevance, singularity, and quality to the general public. All of these elements contribute to the status of an artist and their work achieves in the industry. By how much do they actually increase the value, though, is not quantifiable a priori. 

Banksy – Soup Can, 2005

Why is contemporary art is particularly hard to forecast? Well…because it’s pretty “new”! The fact that artists are still around and working means that their career is continuously evolving and therefore it’s harder to know which direction it will take and how the market will react to it. The value becomes more tied to the market taste, which could mean more volatility and less liquidity in the short term. Guess what though, that could potentially be great news! Do you know the old saying “buy low, sell high”? Contemporary art gives people the opportunity to do their research and spot the potential in an artist/artwork when the price is still relatively low, ideally considerably increasing its value over the years to come. Although the risk of that not happening is always there.

What does Feral Horses do in order to foster the increase of the value of an artwork?

Of course, once a campaign is successfully closed we’re not going to kick back and relax, it’s time to go out there! Depending on each project, the artwork is either managed by the seller (the art gallery or the artist) or by us.

Thanks to the sales campaign on Feral Horses, the seller is able to finance various initiatives to increase an artwork’s visibility and value. Together with Feral Horses, the co-owned art can be publicly exhibited. From museum loans to attending fairs, gallery openings and PR stunts or collaborations with brands.

The objective is to increase the artwork visibility so that more and more people can enjoy it, and ideally increase the value for its co-owners.

It is important to mention that Feral Horses, just like any other market player, cannot guarantee that the value of an artwork will increase with time.

As with any other investment asset, buying shares of art carries investment risk. The value of an artwork may diminish, resulting in a loss of capital for the investor. 

Having said that, wanna give it a go, nourish your passion for art, and become an art co-owner? Check out the active campaigns on Feral Horses.

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